Mediation is a process in which the parties agree to have a neutral third party assist them in trying to resolve their dispute. The mediator has no authority to issue a decision, but rather helps the parties assess the relative strengths and weaknesses of their respective positions, with a goal of reaching a mutually agreed upon settlement.
If the parties are able to reach a resolution, they usually sign a binding settlement agreement. If no settlement is reached the
parties are not bound by what was discussed in the session. Mediation is an informal process, in a confidential setting, that allows parties to explore any issues that they may consider relevant to help them come to terms.
Although the mediator is not in a decision-making role, the parties may request a "case evaluation." A case evaluation may be oral or written. It is generally non-binding and allows the mediator to express his or her thoughts as to the relative merits of the case. A case evaluation can be used as a guide to the parties in their settlement negotiations.
In arbitration, parties agree to have a neutral third party, usually an attorney or retired judge who has expertise in the particular subject matter, hear the case presented and render a decision.
Arbitration is similar to a trial yet less formal and time-consuming, and less costly. In most cases the parties agree that the decision will be final and binding. An arbitrator is not bound by the rules of evidence and has a great deal of leeway in handling evidentiary issues. Most arbitrators will take rules of evidence into consideration but are not required to do so.
Evidence is presented and both sides usually make opening and closing statements. If witnesses are present, there is often direct and cross-examination. Pre-arbitration motions, hearings, or conference calls are possible to discuss the ground rules on how the hearing will proceed.
Parties to an arbitration hearing may choose to agree on "high/low parameters" that will limit the possible range of awards. These parameters are usually not disclosed to the neutral, but if the parties agree, may be disclosed.
Since arbitration is a contractual agreement between the parties, these agreements may involve terms specific to the case at hand, such as "liability only" decisions or any other limits as to what the arbitrator is being asked to rule on. Arbitrators generally issue a written decision within two to four weeks of a hearing.
In some cases, usually larger or more complicated ones, the parties may choose to utilize an arbitration panel composed of two or three arbitrators. In a two-member panel, each party picks an arbitrator and the two render a mutually agreed upon decision.
Two-member panels are most often used in "damages only" cases where the sole issue is valuation of an injury.
Tribunals, or three member panels, are usually composed of a neutral picked by each side and a third arbitrator chosen by the first two neutrals or jointly by the parties. The three arbitrators hear the case together, mutually discuss how they will rule, and choose a panelist to write the decision, which they will sign and render.